JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: BRIMSTONE RESOURCES LTD -v- EMPIRE RESOURCES LTD [2018] WASCA 107
CORAM: MITCHELL JA
BEECH JA
HEARD: 26 JUNE 2018
DELIVERED : 26 JUNE 2018
PUBLISHED : 28 JUNE 2018
FILE NO/S: CACV 60 of 2018
BETWEEN: BRIMSTONE RESOURCES LTD
Appellant
AND
EMPIRE RESOURCES LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: SMITH J
Citation: BRIMSTONE RESOURCES LTD -v- EMPIRE RESOURCES LTD [2018] WASC 185
File Number : CIV 1959 of 2018
Catchwords:
Practice and procedure - Application for injunction pending determination of appeal from order refusing interlocutory injunction - Whether secured creditor should be restrained from enforcing security until cross-claim is resolved - Whether new point may be raised on appeal - Operation of 'no set-off' clause - Whether payment of disputed debt into court would be an appropriate condition to the grant of any injunctive relief
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Appellant | : | Mr G R Donaldson SC & Mr J C Yeldon |
| Respondent | : | Mr W J C Zappia |
Solicitors:
| Appellant | : | Chris Stokes & Associates |
| Respondent | : | HWL Ebsworth Lawyers |
Case(s) referred to in decision(s):
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231
House v The King (1936) 55 CLR 499
Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161
LPH Developments Pty Ltd v Jameson Moore Pty Ltd [2018] WASCA 95
McLennan v McCallum [2010] WASCA 45
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2017] WASCA 76
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Mostert v Durban Roodepoort Deep, Ltd [2004] WASCA 309
Oswal v Commonwealth Bank of Australia [2013] WASCA 58
Palaniappan v Westpac Banking Corporation [2016] WASCA 72
Saldanha v City of Belmont [2018] WASCA 7
Saunders v The Public Trustee [2015] WASCA 203
Sovereign Grange Pty Ltd v A V Truck Services Pty Ltd (No 2) [2017] WASCA 142
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
REASONS OF THE COURT:
At the conclusion of the hearing of the appellant's application in this appeal (Application) on 26 June 2018, we made the following orders:
(1)The application in an appeal dated 18 June 2018 is dismissed.
(2)Order 1 of the orders made by Mitchell JA on 18 June 2018 is discharged.
(3)The appellant is to pay the respondent's costs of the application in an appeal to be assessed if not agreed.
These are our reasons for making those orders.
Introduction
The appellant (Brimstone) and respondent (Empire) are joint venture partners who respectively own 40% and 60% shares in mining tenements on which a gold deposit known as Penny's Find is located. They are in dispute as to amounts payable under the relevant joint venture agreements.
There is no doubt that…
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- AGLC
- Brimstone Resources Ltd v Empire Resources Ltd [2018] WASCA 107
- Case
- [2018] WASCA 107
- Decision Date
CaseChat Overview and Summary
The legal issues before the court were whether the secured creditor should be restrained from enforcing its security until the cross-claim was resolved, whether a new point could be raised on appeal, and the operation of the 'no set-off' clause. The court held that suspension clauses in instruments of security are enforceable and preclude reliance on counterclaims unless they impeach the instrument itself or dispute the primary obligation. The court found that Brimstone's claims for payments were just that: claims. Empire disputed the claims and was not acting in bad faith. The evident object of the suspension clauses would be defeated if payment could be delayed on the basis of a genuinely disputed claim by Brimstone. Therefore, Empire was entitled to enforce its securities by reason of Brimstone's failure to repay the agreed expenditure amount.
In light of the above, the court dismissed the appeal. The court held that the security agreements contained clear suspension clauses that precluded Brimstone from relying on its cross-claim to delay payment. The court also held that a new point could not be raised on appeal. Finally, the court held that payment of the disputed debt into court would not be an appropriate condition to the grant of any injunctive relief.
The court made no orders in relation to the application for an injunction.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
'Suspension' clauses expressed in these terms are common in instruments of security and guarantee. It is well recognised that such clauses are enforceable and exclude set‑off or a counterclaim whether the claim arising is statutory, common law or equitable. Clauses of this kind are generally construed as meaning what they say and as precluding reliance on any claim which does not impeach the instrument itself or dispute the primary obligation. The purpose of such clauses is to prevent the commercial purpose of the instrument being defeated by an obligor raising a defence to an action to enforce the security or guarantee by way of a plea of a set‑off or counterclaim.[40][40] Palaniappan v Westpac Banking Corporation [2016] WASCA 72 [73] - [85], [130] - [141], [151] - [160]; Oswal v Commonwealth Bank of Australia [2013] WASCA 58 [45], [54] ‑ [55]; George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; (2015) 303 FLR 231 [288] and cases there cited. It should not be overlooked that Brimstone's claims for payments said to be due under the agreements are just that: claims. Thus, it is not, as senior counsel for Brimstone submitted, a situation where:[41]Empire, having an obligation to pay these moneys, refuses to do so and then says 'you owe us a sum which is less than that which, if you don't pay …, we will exercise on the securities. Whether Empire has any such obligation remains to be determined. Brimstone's claims are disputed by Empire. There is no suggestion that Empire is acting in bad faith in disputing Brimstone's claims for payments. The evident object of the suspension clauses would be defeated if payment of the Secured Money could be delayed on the basis of, and pending the determination of, a genuinely disputed claim by Brimstone for payment to it by Empire under the agreements.[41] Appeal ts 39. In the present case, the meaning of the suspension clauses is clear. Brimstone's claims for payments due from Empire under the relevant agreements do not impeach the suspension clauses or the instruments in which they are contained. Brimstone is clearly not entitled to deduct amounts which may be owed by Empire to it under the agreements from its repayment of the Agreed Expenditure Amount in full by the Open Cut Completion Date. For these reasons, the issues on the Application are to be approached on the basis that Empire is clearly entitled to enforce its securities by reason of Brimstone's failure to repay the Agreed Expenditure Amount in full by 6 June 2018. That entitlement exists even if Brimstone is correct in both its contentions that:(1)the outstanding balance of the Agreed Expenditure Amount as at 6 June 2018 was less than the amount claimed by Empire; and (2)a distribution in the amount claimed by Brimstone was due to it under the agreements. We accept that, if an injunction is not granted pending the determination of the appeal, the appeal will be rendered nugatory so far as it challenges the primary judge's refusal to grant an interlocutory injunction. It can be anticipated that, unrestrained, Empire will take steps to enforce its security before the appeal is determined.